GDS Holdings Ltd. Plummets: What Happened on Tuesday?

On Tuesday, April 8, 2025, GDS Holdings Ltd. (GDS) experienced a significant drop in its stock price, falling by 14.34% from $20.64 to $17.68. This decline marked the fourth consecutive day of losses for the company, which has seen its stock price fall in 7 of the last 10 days, resulting in a total decline of 34.62% over this period. The question on everyone's mind is: what caused this dramatic drop?

Several factors contributed to the significant decline in GDS Holdings Ltd.'s stock price on Tuesday. One of the most notable factors was the increase in trading volume on falling prices. The volume of shares traded increased by 3 million on the last day, but this increase occurred on falling prices. This may indicate that there was significant selling pressure, which could have contributed to the stock's decline. As stated, "Volume has increased on the last day by 3 million shares but on falling prices. This may be an early warning and the risk will be increased slightly over the next couple of days."

Another factor that contributed to the decline was the negative technical signals that the stock was exhibiting. The stock holds sell signals from both short and long-term Moving Averages, indicating a more negative forecast. Additionally, there is a general sell signal from the relation between the two signals where the long-term average is above the short-term average. This technical analysis suggests that the stock is in a downward trend, which could have influenced the significant drop in price.

Despite being oversold on RSI14 (13), which often poses a good rebound chance, the stock continued to fall. This indicates that the selling pressure was strong enough to override the typical rebound expectations from an oversold condition. The lack of support from accumulated volume below the current price level also exacerbated the price decline, as there were no significant buying interests to counteract the selling pressure.

The recent financial performance of GDS Holdings Ltd. has also significantly influenced investor sentiment and contributed to the stock's decline. For the fourth quarter of 2024, net revenue increased by 9.1% year-over-year to RMB2,690.7 million (US$368.6 million), but the net loss from continuing operations was RMB173.4 million (US$23.8 million). This net loss, despite the revenue increase, indicates that the company is still facing significant challenges in turning a profit. Additionally, the adjusted EBITDA (non-GAAP) increased by 13.9% year-over-year to RMB1,297.7 million (US$177.8 million), but this increase did not translate into a positive net income.

For the full year of 2024, net revenue increased by 5.5% year-over-year to RMB10,322.1 million (US$1,414.1 million), but the net loss from continuing operations was RMB770.9 million (US$105.6 million). The adjusted EBITDA (non-GAAP) increased by 3.0% year-over-year to RMB4,876.4 million (US$668.1 million), but again, this did not result in a positive net income.

These financial results have likely contributed to the negative investor sentiment and the stock's decline. The company's inability to convert revenue growth into net income, coupled with the significant net losses, has raised concerns about the company's financial health and its ability to generate sustainable profits. This has led to a sell-off in the stock, as investors become cautious about the company's future prospects. The stock's volatility, with a daily average volatility of 11.66% over the last week, further highlights the uncertainty and risk associated with investing in GDS Holdings Ltd.

In conclusion, the significant drop in GDS Holdings Ltd.'s stock price on Tuesday can be attributed to a combination of factors, including increased selling pressure, negative technical signals, and the company's recent financial performance. The lack of support from accumulated volume and the oversold condition on RSI14 also contributed to the decline. Investors should closely monitor the stock's performance in the coming days and weeks, as the increased risk and volatility may continue to impact the stock's price.